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guarantee is not sufficient to render the letter of guarantee invalid at the
end of the term.
This is affirmed with the decision of the Court of Appeals dated
24.01.2013 and numbered 2012/798 E., 1542 K. According to this
decision, in order for a letter of guarantee to become invalid at the end
of its term if no demand for compensation is made, this must be stated
explicitly within the letter. The letters of guarantee subject to said decision
stated a date of expiration but did not include a clause specifically stating
that they would become invalid if a written demand of compensation was
not made before the end of the term. The Court of Appeals deems that,
in such cases, even if the term of the letter of guarantee ends, the letter of
guarantee shall remain in effect for ten years as of the date of expiration.
Conclusion
Issues with respect to the term and prescription of letters of guarantee,
which are frequently used in commerce, require attention. Letters of
guarantee with a fixed term may be subject to execution during the ten
year prescription period, starting from the end of the term of the letter
of guarantee, unless it is specifically stated within the letter that it shall
become invalid at the expiration date unless a demand for compensation
is made before the end of its term. The consistent opinion of the Court of
Appeals affirming this may be seen in its recent judgments.